With the recent negative trend in Debt (Short term debt / Dynamic bond) fund, I am seriously looking at ICICI Equity arbitrage fund (Thanks to Mr.Pattu), As it has the advantage of risk free and Tax free.

An arbitrage fund is similar to a liquid fund wrt returns and like a equity fund wrt tax. It is USUALLY risk-free.
However if there is a crash like 2008, this may give -ve returns. (although most funds did not in india).